Macro Economic Background - Domestic consumption during the Spring Festival showed strong performance, with a 6.7% year-on-year increase in cross-regional personnel flow during the holiday period from February 7 to February 26, 2026 [11] - Retail and catering enterprises reported a daily sales increase of 8.6% year-on-year in the first four days of the holiday, with significant growth in smart wearable devices and duty-free sales in Hainan [11] - Real estate sales improved, with a 25.5% year-on-year increase in average daily transaction area of commercial housing in 30 major cities during the Spring Festival [11] - The box office revenue for the Spring Festival period decreased by 40% year-on-year, indicating a decline in movie-going enthusiasm [11] A-Share Market - In February, the A-share market experienced a high-level consolidation with a focus on small-cap and dividend stocks [8] - The market is expected to shift from a valuation expansion phase to a performance-driven phase as the "Two Sessions" policy discussions unfold [3] - The market is likely to focus on policy expectations and external geopolitical risks in March, with a potential rebound in economic data following the Spring Festival [3] Fixed Income Market - In February, bond market yields trended downward, with a focus on structural opportunities as the 10-year government bond yield is expected to remain above 1.80% [8] - The bond market may face profit-taking pressure, and investors are advised to look for specific opportunities [3] Currency Exchange Rates - The US dollar index is expected to fluctuate weakly, with increased volatility anticipated [8] - The Chinese yuan is expected to maintain a strong oscillation, although geopolitical uncertainties may lead to increased volatility [3] Overseas Markets - The US stock market is projected to exhibit a fluctuating pattern, with attention on the evolution of AI narratives [8] - The bond yields in the US are expected to have limited downward space in the short term, influenced by changes in risk aversion sentiment [3] - The Hong Kong stock market is likely to remain under pressure from external sentiments, with a significant pullback in the Hang Seng Technology Index [3] Commodities - The geopolitical situation in the Middle East may drive oil prices up in the short term, but there is a risk of a significant price drop if conflicts do not persist [4] - Gold prices are expected to remain strong in the short term due to ongoing geopolitical risks, with a long-term upward trend anticipated [4] - Copper prices are expected to rise as macroeconomic fundamentals improve [4]

Sales Performance - During the 2026 Chinese New Year, Hainan offshore duty-free sales reached Rmb2.72 billion, up 30.8% YoY[2] - The number of items sold was 1.997 million, reflecting a 21.9% YoY increase[2] - The number of shoppers reached 325,000, marking a 35.4% YoY growth[2] Daily Averages - Daily average shopping amounts were Rmb303 million, with a YoY increase of 16.5%[2] - Daily average number of shoppers was 36,000, up 20% YoY[2] - Daily average items sold were 222,000, representing an 8.3% YoY increase[2] Consumer Trends - The average transaction value during the holiday was Rmb8,369, down 3.4% YoY[3] - The sales share of high-value items like gold and mobile phones dropped by about 50% compared to peak levels[3] - The sales share of high-margin categories such as fragrances and luxury goods rebounded, indicating improved gross profit margins[3] Future Outlook - The growth rate for offshore duty-free sales in 2026 is expected to exceed 20%, but not reach the 30%-40% peak seen from November 2025 to January 2026[4] - The Hainan government plans to continue issuing consumption vouchers, maintaining a high distribution intensity[12] - New competitors are entering the market cautiously, as they have not yet developed effective strategies to compete with China Duty Free[5]

Core Insights - The 2026 Spring Festival holiday saw a significant increase in consumer spending across various sectors, with a nationwide average daily sales revenue growth of 13.7% compared to the previous year [1] Consumer Market Data - Domestic tourism experienced explosive growth, with over 600 million trips taken and nearly 800 billion yuan in tourism revenue, marking a 20% increase in trips and a 17% increase in revenue year-on-year [2] - The retail and catering sectors reported a daily sales increase of 10.6% among key enterprises, with foot traffic and sales in monitored pedestrian streets rising by 23.2% and 33.2% respectively [5] - The film industry generated a total box office of 5.752 billion yuan during the Spring Festival period, with 120 million admissions, despite a 6% decrease in average ticket prices [6] Hainan Duty-Free Sales - Hainan's duty-free sales reached 2.72 billion yuan during the Spring Festival, reflecting a 30.8% year-on-year increase, with the number of shoppers also rising significantly [7] Key City Consumer Data - Beijing's monitored enterprises achieved sales of 8.45 billion yuan, with foot traffic in key commercial areas increasing by 5.8% [10] - Shanghai's total consumption reached 60.35 billion yuan, with offline sales growing by 15.4% [11] - Guangzhou attracted nearly 20.1 million tourists, generating 20.1 billion yuan in tourism revenue, marking a 9.3% increase [15] - Shenzhen reported a 19.8% increase in tourism revenue, with key commercial areas seeing an 18.7% rise in foot traffic [17] - Chengdu ranked as the second most popular domestic destination, with total consumption of 63.17 billion yuan, a 10.3% increase [22] Regional Highlights - The overall tourism market in Hainan showed a 30.7% increase in total spending, with 12.32 million visitors during the holiday [36] - Fujian's night-time cultural and tourism consumption areas received nearly 1.9 million visitors, with a significant increase in overall tourist spending [38] - In Shaanxi, retail and catering enterprises reported a total sales of 2.062 billion yuan, with notable growth in key retail locations [39]

Summary of the Conference Call Records Industry Overview - The social service industry showed significant recovery during the 2026 Spring Festival, with transportation and travel accelerating. Railway growth reached 10.7% and civil aviation grew by 8%. The hotel industry also saw substantial growth from a low base, with Hainan's duty-free sales increasing by 19% year-on-year, indicating a stabilizing consumption environment and strong leisure demand [1][2]. Core Insights and Arguments - The social service industry is viewed positively for its allocation value, as the effects of policy stimulus have not yet fully materialized, but demand is showing signs of stabilization and recovery. The direction of policy support for service consumption is clear, suggesting investment in quality leading companies and turnaround candidates such as Luckin Coffee, Atour, Gu Ming, Huazhu, and China Duty Free [1][5]. - The hotel and duty-free sectors performed well during the Spring Festival, but high pre-holiday expectations may have already been reflected in stock prices. China Duty Free's valuation is considered expensive, with the market focusing on the sustainability of its high growth [1][6]. - The issuance of consumption vouchers and government subsidies is a key concern for investors, as these policies are expected to cause stock price fluctuations. The impact of gold and mobile phone categories on China Duty Free's gross margin differs, with gold having a positive effect and mobile phones potentially having a negative impact [1][7][8]. Important but Overlooked Content - The hotel industry data is not fully released yet, but early indicators show significant growth in hotel demand during the Spring Festival, with occupancy rates increasing by 10% to 20%. However, business travel demand's actual improvement remains to be observed, with March being a critical observation point [1][9]. - The overall travel and dining sectors experienced robust demand during the Spring Festival, with nationwide retail and dining enterprises seeing an average daily sales increase of 8.6% year-on-year [1][11]. - Japan's service consumption policies provide valuable insights for China, highlighting the effectiveness of combining short-term direct stimulus with long-term institutional optimization to enhance service consumption [1][12]. Key Companies to Watch - In the dining sector, recommended companies include Luckin Coffee, Gu Ming, Mixue, and Yum China. Luckin Coffee has shown strong same-store growth, while Gu Ming is expanding its offerings and maintaining a robust growth trajectory. Mixue is also expanding aggressively, and Yum China is expected to see modest growth in same-store sales [1][14][15]. - In the tourism sector, attention is drawn to Shaanxi Tourism, which has quality assets and is expected to maintain steady growth, with profit increments anticipated from its subsidiaries and upcoming projects [1][16].

Summary of Key Points from the Conference Call Industry: Hainan Duty-Free Shopping Core Sales Data 1. During the first day of the Spring Festival (February 15, 2026), Hainan's offshore duty-free shopping reached CNY 257 million, representing a year-on-year increase of 135.8% compared to the same day in 2025 (January 28, 2025) [1] 2. For the first three days of the Spring Festival (February 15-17, 2026), the total shopping amount reached CNY 680 million, showing a growth of 18.9% compared to the same period last year (January 28-30, 2025) [1] 3. According to the Business Department's data, the cumulative sales for the first four days of the Spring Festival (February 15-18, 2026) amounted to CNY 970 million, which is a 15.8% increase compared to the same period last year (January 28-31, 2025) [1] Additional Insights 1. The Spring Festival's first day this year fell on the 28th day of the lunar month rather than New Year's Eve, which is expected to result in a higher year-on-year growth rate than previously reported [1]

Domestic Economic Performance - During the Spring Festival from February 2 to February 21, 2026, the total inter-regional population flow reached 508,011.5 million, an increase of approximately 5.5% compared to 2025[1] - Domestic tourism consumption grew by 4.5% in the first three days of the holiday, driven by favorable weather and an extended holiday period[1] - The average daily sales of key retail and catering enterprises increased by 8.6% year-on-year in the first four days of the holiday[1] - Real estate sales improved significantly, with a total transaction area of 72,500 square meters in 30 cities during the holiday, a 54% increase compared to 2025[1] International Trade and Market Trends - The U.S. Supreme Court ruled that IEEPA tariffs were unconstitutional, leading to a potential 5%-10% reduction in tariffs on Chinese goods[2] - Trump's announcement to raise tariffs to 15% may create a new window for export opportunities for China[2] - Global stock markets showed a slight rebound during the Spring Festival, with major indices like the Nikkei and Dow Jones reaching historical highs[3] Asset Outlook - The Chinese Yuan is expected to continue appreciating, with projections moving towards 6.8 against the USD[4] - A-shares are anticipated to perform well due to stable domestic fundamentals and favorable external market conditions[4] - The bond market is expected to experience narrow fluctuations in yields due to a relaxed liquidity environment post-holiday[4]

1. Report Industry Investment Rating No relevant content provided. 2. Core View of the Report This year's Spring Festival holiday had unique advantages, including the longest duration in history and a consumption - stimulating activity. It showed excellent performance in multiple dimensions, especially in travel and consumption. The real - estate market showed signs of hitting the bottom, while the film market was dismal. Overseas capital markets had various trends due to factors like Fed's FOMC meeting minutes, geopolitical conflicts, and AI industry development [2][8]. 3. Summary by Related Catalogs Travel - The Spring Festival travel rush saw a continuous increase in long - distance travel. The total cross - regional passenger flow from February 2nd to 21st this year increased by 5.4% compared to the same period in 2025 and 26.3% compared to 2019, reaching a record high. The number of passengers in various transportation modes increased by about 5% - 6%. The self - driving travel enthusiasm was significantly boosted, with the national population migration scale index from the 15th day of the twelfth lunar month to the fifth day of the first lunar month increasing by 22.2% this year compared to 2025 [3][9][12]. - The difference in growth rates between the data from the Ministry of Transport and Baidu Migration was likely due to statistical methods. The non - operational passenger volume on roads accounted for 81.3% of the total cross - regional passenger flow, indicating that self - driving was the main mode of travel during the Spring Festival [16][17]. Consumption - Retail, catering, and service consumption were active. The average daily sales of key retail and catering enterprises in the first four days of the holiday increased by 8.6% compared to the same period in 2025, higher than the growth rates during the May Day and National Day holidays in 2025. The consumption of domestic tourism on key platforms increased by 4.5% in the first three days of the holiday. The rental car order volume on key platforms increased by 26%, and the north - south cross - region orders increased by 196% [4][19][22]. - The "trade - in" policy continued to release consumer demand. By February 19th, the trade - in of consumer goods benefited 28.88 million people, driving sales of 198.02 billion yuan. Smart devices maintained high growth, and Hainan's duty - free sales increased rapidly [22]. Film Market The film market continued its dismal performance since 2025, hitting a new low in the Spring Festival season in the past 7 years. As of the afternoon of the sixth day of the first lunar month, the cumulative box office of this year's Spring Festival season was 4.91 billion yuan, and it was unlikely to exceed 6 billion yuan. The number of screenings reached a new high, but the number of movie - goers hit a new low, mainly due to the lack of high - quality works [25]. Real - Estate Market The real - estate market showed a weak rebound at the bottom, with first - tier cities having a stronger rebound than second - and third - tier cities. From the first to the fifth day of the first lunar month, the average daily sales volume of commercial housing in 30 large and medium - sized cities was 1.04 million square meters, a 24.9% increase compared to the same period last year. The transaction and listing prices of second - hand houses in January also showed signs of stabilization. If the trend in the past 1 - 2 months continues, the real - estate sales may have hit the bottom [5][29]. Overseas Capital Markets - Most overseas bond yields declined. The 10 - year US Treasury yield adjusted upwards due to the hawkish FOMC meeting minutes and tariff policy fluctuations. European bond markets generally strengthened under the expectation of easing. The 10 - year Japanese government bond yield declined by 10.9bp, while the 10 - year Indian government bond yield increased by 4.8bp [6][32]. - The US dollar index strengthened, and the copper - gold ratio fluctuated weakly. Most overseas commodities rose, with oil and coal prices rising by more than 5%. Precious metals and some agricultural products also had varying degrees of increase [35][37]. - European and American stock markets rose collectively, while Asian stock markets were divided. The US stock market rebounded strongly, and European stock markets followed suit. The South Korean stock market hit a record high, while the Hong Kong and Japanese stock markets were weak. The FTSE A50 index rose 0.3% during the holiday [40].

Core Insights - The Ministry of Finance, General Administration of Customs, and State Taxation Administration have announced a "zero tariff" policy for inbound goods consumed by residents of Hainan Free Trade Port, effective immediately [2] - During the upcoming Spring Festival travel period, cross-regional passenger flow is expected to reach 9.5 billion trips, setting a new historical record [2] - The duty-free sector is anticipated to see a return to stable profit margins, while the restaurant and hotel sectors are expected to benefit from overall industry value enhancement [1][3] Duty-Free Sector - Hainan has approved 15 duty-free operators, including 6 domestic and 3 foreign companies, with 202 product categories primarily focused on daily necessities [3] - Since the implementation of the new duty-free policy, shopping amounts have exceeded 10 billion yuan, with a year-on-year increase of 25.32% [3] - The first month of duty-free sales in Hainan reached 4.86 billion yuan, a year-on-year increase of 46.8% [3] Hotel Sector - The hotel sector is expected to stabilize and improve by 2026, with a focus on enhancing the overall value chain and operational capabilities [1][7] - The hotel market is experiencing a gradual recovery, with RevPAR showing slight improvements, particularly in tourist-heavy areas like Sanya [7][8] - The overall hotel supply is stabilizing, with a focus on optimizing supply chain and operational efficiency [9] Restaurant Sector - The restaurant industry is entering a phase of supply-side optimization, with a focus on enhancing operational efficiency and brand strength [10][12] - The competitive landscape remains intense, with leading brands benefiting from supply chain advantages and operational efficiencies [11][13] - The overall chain rate in the restaurant sector is steadily increasing, particularly in the ready-to-drink beverage segment [13] Tourism and Leisure Sector - The tourism sector is a key driver for domestic demand, with policies expected to continue supporting growth through 2026 [15][16] - The upcoming Spring Festival is projected to see significant increases in travel bookings, with a year-on-year growth of over 30% in service reservations [14] - The government aims to accelerate the development of an international tourism consumption center in Hainan [4][5] Cross-Border E-Commerce Sector - The cross-border e-commerce sector is expected to benefit from the overall quality and brand effect of Chinese manufacturing, with significant market share growth in overseas markets [19] - The U.S. is entering a rate-cutting cycle, which may positively impact the cross-border e-commerce landscape [19] - Companies are adapting to new competitive environments, leveraging strong supply chains and product quality to drive growth [19][20]

Group 1 - China Duty Free Group's stock price increased by 8.95%, currently at HKD 102.30, with a trading volume of HKD 398 million [1] - Wanlian Securities noted that the establishment and improvement of the supply chain for fast-moving consumer goods to high-end luxury products in Hainan, combined with the expected relaxation of duty-free shopping limits and product categories, will significantly enhance Hainan's attractiveness to domestic and international tourists [1] - Guosheng Securities anticipates that the prosperity trend of Hainan's offshore duty-free industry will remain strong during the Spring Festival peak season [1]

Core Viewpoint - The stock price of China Duty Free Group (01880) increased by 8.95%, currently trading at HKD 102.30, with a transaction volume of HKD 398 million [2][3]. Group 1: Market Analysis - Wanlian Securities indicates that the establishment and improvement of the supply chain for fast-moving consumer goods to high-end luxury products in Hainan will enhance the region's attractiveness to domestic and international tourists, as well as the appeal for talent in related industries [5]. - The expected relaxation of duty-free shopping limits and product categories for island residents is anticipated to further boost Hainan's tourism appeal [5]. - Guosheng Securities forecasts that the prosperity trend of the Hainan offshore duty-free industry will remain strong during the upcoming Spring Festival peak season [5].